DUBAI — The Dubai Financial Services Authority (DFSA) has granted a licence to Allianz Re, the re-insurance arm of Munich-based Allianz Group, to operate as an authorised firm from the Dubai International Financial Centre (DIFC). It will start writing re-insurance business from mid-2007.
The establishment of an office in the DIFC will allow Allianz Re, one of the world's largest insurance and financial services providers, "to participate in the growth potential in the Middle East," said Clement Booth, member of the board of management, Allianz SE. Booth estimates that re-insurance accounts for about 10 per cent of global retail premiums with the Middle East accounting for $2-$3 billion annually. Allianz Re intends to capture a large share of this market.
"The opportunities for reinsurance in the region are enormous, and our association with the DIFC will provide us with a logistical, regulatory and strategic framework and a level of expertise that will help us make the most of these extremely significant opportunities," added Booth. He also predicted that the global market for re-insurance would remain stable throughout 2007, primarily because premiums were not rising.
Chief executive officer of the DIFC Authority, Nasser Al Shaali, said: "Worldwide, demand for insurance and reinsurance has never been greater, and that upward trend is plainly evident here in the Gulf and across the Middle East. From a sophisticated and secure base at the DIFC, firms such as Allianz Re can reach out to a region with a premium pool of over $30 billion and an insurance market forecast to grow at an annual rate of over 10 per cent."
Allianz Re has been present in the region since 1978. "The office relocation to the DIFC represents a new chapter to position Allianz as a leading re-insurance partner and to better tap the large market potential in the region," said Alliance Re's CEO, Klaus-Otto Bick. "We believe our strong track record in such areas as risk management, alternative risk transfer, underwriting and claims support will contribute to our success in the region." Asked whether there was potential to enter "takaful" re-insurance, Bick said: "We have to ask whether this is the right answer for the protection of re-insurance."
Since 2003, gross premiums written (GPW) by Allianz Re's Dubai branch have increased from 19.4 million euros in 2003 to 65.8 million euros in 2005. By business line, engineering accounts for 45 per cent of net premium earnings (NPE), and fire accounts for 32 per cent. By country, the UAE accounts for 36 per cent of NPEs, followed by Bahrain at 11 per cent. The re-insurer works closely with third parties, primarily insurance companies and brokers. It also writes facultative and treaty insurance in industries such as construction and oil and gas.
Worldwide, Allianz SE reinsurance increased its net premium earnings (NPE) from 3,609 million euros in 2003 to 3,287 million euros in 2005.